Over the last eight years, America has flexed its muscles at tax havens everywhere. Today, the IRS and Justice Department are feared worldwide. The U.S. has crushed Swiss banks and rooted out U.S. account holders across the globe. With FATCA, the Foreign Account Tax Compliance Act, we have cowed the world into submission. making foreign banks and foreign governments hand over secret bank data about depositors.

FATCAwas passed to require non-U.S. banks and financial institutions around the world to reveal American account details or risk big penalties. The big penalties on offshore banks who do not hand over Americans are withholding at 30% on most transactions. There has already been some withholding, but more is on the way. Non-compliant institutions are frozen out of U.S. markets, so there is little choice but to comply. FATCA cuts off companies from access to critical U.S. financial markets if they fail to pass along American data. More than 100 nations have agreed to the law. Countries must agree to the law or face dire repercussions.

FATCA also helped fuel efforts by the OECD to adopt Common Reporting Standards for nations around the world. The OECD has been designing and implementing the system to target tax evasion. Given the IRS fixation on that topic, you might think that the U.S. would join in. With nearly 100 nations around the world agreeing to the OECD pact, it is noteworthy that the U.S. has not.

More than a few observers say that the U.S. does not practice what it preaches. Indeed, a reportby the Tax Justice Network ranks America as one of the worst nations in the world, worse than the Cayman Islands. The report claims that America has refused to participate in the OECD's global automatic information exchange for bank data.

It turns out that the United States jealously guards its information. The Tax Justice Network says the IRS is stingy with data. Of course, with FATCA, America has more data than anyone else. FATCA, the Foreign Account Tax Compliance Act is up and running. The IRS says it is now swapping taxpayer data reciprocally with other countries. The IRS says it will only engage in reciprocal exchanges with foreign jurisdictions meeting the IRS’s stringent safeguard, privacy, and technical standards.

The Tax Justice Network reportblasts the U.S. for being a one-way street: "Though the U.S. has been a pioneer in defending itself from foreign secrecy jurisdictions, aggressively taking on the Swiss banking establishment and setting up its technically quite strong Foreign Account Tax Compliance Act (FATCA) – it provides little information in return to other countries, making it a formidable, harmful and irresponsible secrecy jurisdiction at both the Federal and state levels."

The OVDP remains the safest and most foolproof program, with amnesty even for willful acts. But for those with the right facts, the IRS Streamlined programcontinues to grow in popularity. It is only for non-willful violations, but it is far simpler and much less costly.

For alerts to future tax articles, email me at Wood@WoodLLP.com. This discussion is not legal advice.